Our FM has managed to walk the tight rope by presenting a realistic and pragmatic Budget and made clear his intentions of introducing futuristic tax reforms in India.
On the corporate tax perspective, there is neither a change in the corporate tax rate of 30 per cent, nor a reduction in surcharge from last year. On a positive note, repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent has been extended up to March 31, 2013, which would encourage companies to repatriate foreign funds back into the country.
Maximum amendments have been brought in the Transfer Pricing arena. The powers of the TPO have been enhanced and TP provisions have been stretched to even cover domestic related party transactions exceeding an aggregate value of Rs 5 crore. The scope of ‘international transaction’ is now proposed to cover intangible property, which would impact various multinationals and global conglomerates. Transfer pricing has been the focus of aggressive additions by tax authorities and these Budget proposals indicate that the same would continue.
While the introduction of APA is a welcome step, but the retrospective amendment to nullify the landmark Vodafone decision may dent the FDI sentiment. This Budget has also aimed at curbing the malpractice of black money and unaccounted money.
Budget 2012 has ushered in various ‘Brahmastra’ provisions and their application ought to be cautious to avoid undue harassment to the taxpayers. Pranab Da has however made one message loud and clear in this Budget - Tax evaders, Beware!
Shailesh Haribhakti Chairman, BDO Haribhakti
